Earlier this summer, decision makers from within the institu- tional commercial real estate community gathered in the nation’s capital for the 22nd Annual Institutional Investor
Panel, hosted by REAL ESTATE FORUM and Transwestern. It was a heady
group in terms of knowledge and experience; between them the participants’ companies manage nearly $300 billion in real estate debt and
equity assets globally. They were also a battle-hardened handful, with
most having been through more than one cycle in the industry. This is,
in short, not their first rodeo.

So it was with great interest that we detected subtle signs of moderation after three years of robust transactions and vigorous optimism. While dealmaking—such as the wave of public-to-private transactions—may still
be going strong, debt and equity capital sources are starting to think more about maintaining their wealth,
rather than just adding to it.

This is not to say they’re pumping the brakes—or even tapping on them. The search for yield continues
unabated among these players even as the landscape slightly shifts. Across the board, concerns were voiced
about making numbers pencil in—but that’s nothing new. It’s also become clear that rent growth is no longer
a given and competition and pricing are still making it hard for institutional capital to land good deals. And
of course, interest rate risk remains a concern, though many of the participants voiced comfort in the apparent fact that the Fed is taking its time raising rates.

In short, capital’s still looking for the best opportunities, which are becoming fewer amd farther between. And
when they do emerge, every transaction is greeted with even more scrutiny and analysis that ever before. For
institutions, all this that means getting creative and adjusting the way their approach the market—yet again.

An edited version of the discussion, held in June at the Kimpton Mason & Rook Hotel in Washington, DC, follows.